Nomura sets up fund for European distressed assets

TOKYO, June 2 (Reuters) - Nomura Holdings Inc. (8604.T), Japan's largest brokerage firm, said it has started a fund worth 2.1 billion euros ($3.27 billion) to buy unsold loans and undervalued companies in Europe.

Nomura, which will provide about a quarter of the total fund, is seeking European and Middle Eastern investors, said Michiyori Fujiwara, a Nomura spokesman.

The Japanese brokerage created the fund as the collapse of the U.S. home loan market forced global financial institutions, such as UBS AG (UBSN.VX) and Merrill Lynch & Co MER.N, into massive write-downs of unsold loans and credit trading losses.

Nomura's fund, which is divided into six different categories, will buy unsold senior and mezzanine loans in Europe, Fujiwara said. It will also buy distressed companies in France and Spain, he said.

Nomura posted a net loss of 153.85 billion yen ($1.46 billion) in the three months to the end of March due to the deepening credit crisis.

Still, Nomura and other Japanese financial institutions have had limited exposure to U.S. subprime products and their credit losses have been relatively smaller, compared with those at major Western financial institutions. (Reporting by Junko Fujita)